Friday, January 25, 2013

Supply chain as a competitive advantage

The smartphone space has been the center of activity in the consumer electronics industry over the past couple of years. Few would disagree that apple has been the leader in the space despite lacking a significant early mover advantage. Any discussion of Apple almost always heads in the direction of importance of good design. Why should this article be any different? Recently, I came a very interesting compilation of their uncanny similarity with products of the German Manufacturer Braun in the 1960s - here.

As glamorous as the ‘good design’ may seem, the singular reason the company was able to turn itself around is often overlooked. Not always does customer demand translate into huge profits. Product design is a small part of the story. Apple runs its ship is its tight control over the Supply Chain and distribution network (Apple Store network). The supply chain for the iThings has seen significant improvements since the early days..

The two articles Demand Forecasting and Cleaning the Crystal Ball emphasize the importance of forecasting customer demand. This still remains an inaccurate science and executives rely on intuition. Ask Google. Despite its data crunching capabilities, LG and Google had a public fall-out due to ‘Scarce and Erratic’ supply of their flagship Android offering – Nexus 4 during the 2012-23 holiday season.  In the highly contended market for smartphones where design differences are diminishing, can the robust supply chain prove to be the competitive advantage for Apple?

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